Sorry suppliers, Ford and other automakers set to insource more parts

In this blustery economy, we often hear of jobs being outsourced to save money. The auto industry, however, and in particular Ford, is set to start a new trend: insourcing. Rather than contracting with suppliers to build certain components or sub-assemblies, automakers are now considering doing that work internally with union employees. The Detroit Free Press reports that Ford will be one of the first this spring when it begins assembling its own instrument panels for the Ford Taurus and Lincoln MKS sedan at its plant in Chicago.
The motivation to insource is the same it is for outsourcing: saving money. The United Auto Workers union signed new contracts with Ford, General Motors and Chrysler LLC. that allow each automaker to hire union workers at a new second-tier wage of around $14, or about half of the previous starting wage. Coupled with lower benefits, it's now cheaper in some cases to have the union do what was previously outsourced to a supplier.

It appears that the UAW had this in mind all along. The Big 3 actually agreed in writing with the UAW to begin insourcing a certain number of jobs – 3,000 for GM, 1,500 for Ford and 1,025 for Chrysler. The UAW even secured the right to effectively bid for future work along with the suppliers, for whom all of this does not bode well. Automakers, however, are not out to destroy their supplier base, as there'll still remain plenty of parts that make more sense to outsource and plenty that need to still be produced in the mean time.

[Source: The Detroit Free Press]

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